Russian Oil Case Analysis

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According to Forbes Magazine, Russian Oil is the number one oil producer in the market today. Just last year, Russia beats out China in oil sales and thus earned their spot as third behind America and Saudi Arabia. Now, Russia is first on the list of the top oil producers with China in second, the United States in third, and the United Kingdom in fourth. President Elect Donald Trump has stated his plan for American-Russian Energy and trade Policies.
In this extract, Russian Oil Companies might suffer losses due to Trump’s Energy and Trade Policies. He plans to lift the limitations on drilling for oil in Russia. This increases American supply, but lowers the demand for Russian Oil, thus leading some smaller businesses to produce a level of
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There are also the Average Total Cost curve and Average Variable Cost Curve. The Average Variable Cost is the cost per output of a good and is susceptible to change over time. They are found by dividing the variable cost by the number of items that outputted. The Average Total Costs are the sum of the Variable and Fixed Costs. Next is the Marginal Cost curve, which is each additional cost of producing another item of output.

With the increasing supply America would receive due to this new policy, the demand for Russian oil will decrease due to cheaper American oil. The graph shown in Figure 2 describes this action.

On the left in Figure 2, the supply curves for American Oil Companies rise, the price for that American oil also decreases and thus, following the demand curve down to the new equilibrium price, the number of output quantity has increased. The Russian Oil Firm’s demand is dropping due to the Law of Demand because the American Oil Company will lower the price due to the vast amount it now supplies. The Law of Demand states there is a negative correlation between the price of a good and the amount of the good that sold. Because of the lower price of American Oil, more consumers would want to purchase the item if they chose
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